Running head: FIRE IN A BANGLADESH GARMENT FATORY 1

Fire in a Bangladesh Garment Factory

Kelly Hooker
UMUC
Managing Global Business
AMBA660 9044
Professor Robert Tipple
April 22, 2014
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Bangladesh has the second largest garment industry in the world which accounts
for eighty percent of the total export earnings and includes buyers such as Wal-Mart,
Carrefour, C&A, Kmart and Li & Fung (Inkpen, 2013). In May of 2010, a factory opened
that employed 1,500 factory workers and had annual sales of $35 million from the
production of clothing (Inkpen, 2013). In November 2012, a fire started in this factory on
the first floor from yarn that was not kept in fireproof warehouse, which was required by
law; 112 people were killed and several hundred were injured (Inkpen, 2013). The
factory was eight stories high while the top three floors were under construction; the fire
department had difficulty getting their equipment in to battle the fire due to a lack of fire
exits, and regulated staircases (Inkpen, 2013). Despite the fact that Bangladesh had a
variety of laws to protect factory workers; which required specific routes for escape in
the event of an emergency, a question arose during the after math of the fire as to who
was responsible for keeping the factories in compliance with fire safety regulations
(Inkpen, 2013). An advocacy group called the Clean Clothes Campaign, has estimated
that there have been more than 30 Bangladesh garment fires with over 500 deaths
between 2006 and 2012 with 80% of the fires starting due to faulty wiring (Inkpen,
2013).
There are many political, social, and ethical issues that need to be recognized
and closely addressed when entering into a country and opening a business. First there
is the exchange of political beliefs, the interpretation of political freedom, tradition of
legality, premise of equity, and the action of power that makes for the threat of political
environments around the world (Daniels, Radebaugh, & Sullivan, 2013). Bangladesh
has a parliamentary democracy; democratic form of government in which the party (or a
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coalition of parties) with the greatest representation in the legislature. Like many other
countries, Bangladesh has multiple political parties; as a matter of fact there are five
major political forces: Bangladesh Nationalist Party (BNP), Awami League (AL),
Bangladesh Communist Party, J atiyo Samajtantrik Dal, and the J atiyo Party (J P) party
(Bangladesh Politics, 2013). When entering a country with a variety of ideas on how the
country should be run, compliance with the political laws for running a business may
prove to be difficult. To determine a countries Political risks, an analysis of the historical
stability of the country in question, evidence of present turmoil or dissatisfaction,
indications of economic stability, and trends in cultural and religious activities (Political
Risks, 2012). The rule of law is an expression in a democracy; the law signifies that
there is a just political and social surroundings, assures the constitution of the contracts
and business transactions while safeguarding property rights and individual freedom
(Daniels et al., 2013).
When investing in an emerging market, the MNEs that are strategically located
in the most industrialized countries will face some serious risks due to the cultural and
governmental differences. Among the multiple differences, here are a few that are
faced:
Differences in allowable ownership structures
Differences in human resource norms
Differences in religious heritage
Nepotism and corruption in the host country
Protection of intellectual property rights
Protectionism
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("Political Risks," 2012).
It is important for a corporation engaging in globalization to realize the risk of being
ethical. From a companys standpoint and as well as an individuals standpoint, ethical
behavior can prove to be instrumental in the success of achieving competitive
advantage and will help avoid a company from being perceived as irresponsible
(Daniels et al., 2013). Ethical behavior can also help develop a trusting relationship in
the country of choice for a new and developing business.
There are several legal issues that need to be addressed when contemplating
globalization. There are multiple operational concerns that need to be considered to
stay within the regulations of the local laws; starting, running, hiring employees,
protecting investors, paying taxes, border trading, and enforcing contracts while staying
in compliance with local laws (Daniels et al., 2013). As questioned in the article of the
Bangladesh Fire, there is a legal issue of who is responsible for the safety of the factory
and the workers inside. Although foreign countries have their own safety regulations
and for Bangladesh was noted on several inspections and multiple recommendations
were made to correct the issue, the factory remained out of compliance. This certainly
poses a risk for the vendors that have a stake in the factory and the product being
produced. The question is raised of who is responsible for the upkeep of the factory and
making changes to keep the workers safe. The lack of compliance can create a legal
issue that may cost the vendors millions of dollars in revenue, lawsuits, or even repairs
and upgrades. Corporations, prior to entering into a foreign country for business, should
specify a choice-of-law clause in their contracts to ensure that both parties negotiate a
compromise in the event of any law changes (Daniels et al., 2013).
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Bribery is only one facet of corruption which includes determinants that involve
cultural, legal and political forces (Daniels et al., 2013). Engaging the staff in knowing
that bribery may be expected from the locals and knowing who to turn to for advise
when a worker is confronted with such a situation, is instrumental in being prepared for
such a corrupt confrontation. Being a worker in a business in a foreign country, a policy
should be created and put in place so that there is no question as to what steps are
needed in this situation. I would recommend to a worker to seek assistance from the
manager, and then the manager can go to corporate office and have the issue of bribery
addressed at this level. In either scenario, a worker with guidance or without guidance,
all employees should be trained and made aware of The Foreign Corrupt Practices
Act. The Foreign Corrupt Practices Act is a federal law enacted in 1977 which
prohibits companies from paying bribes to foreign government officials and political
figures for the purpose of obtaining business (World Compliance, 2013, p. 1). There
are two provisions to the Foreign Corrupt Practices Act: the anti-bribery provisions
which are enforced by the Department of J ustice and the accounting provisions which
are enforced by the Securities and Exchange Commission (SEC) (World Compliance,
2013).
In the case of the factory fire that was owned by Tazreen Fashion, LTD, I do
believe that that a portion of responsibility should lie on the shoulders of this corporation
to ensure that their workers have a safe working environment, but the majority of the
responsibility to follow up and make sure the Tazreen Company is doing their due
diligence in the safety of the workers lies in the hands of the American Corporation that
reaps the clothing and the revenue from the factory and the workers. Tanzeen Fashion,
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LDT needs to take responsibility to the country and the people. This company also
reaps the rewards of the workers that are being paid little. It is their responsibility to
make sure the working environment is safe, but I also believe that the US Labor law to
all American Corporations should apply no matter where the factory is located.
Ultimately there needs to be international policies on where the accountability lies in the
event of such a tragedy, which company will be responsible for enforcing inspections
and fines when regulations are not met, in hopes to avoid such incidents.
In reviewing both the Accord and the Alliance, it is clear that there are many
differences in the stated policies to ensure the safety of the factory workers. First, the
two policies were written very differently. The Accord was more generally written with
guidelines but they were not very specific or detailed. The Alliance was written with
detail and specifically noted the steps to take in several categories: fire safety, electrical
safety, structural integrity, escalation process, pre and post assessments, and even had
a detailed section on the requirements needed for a safety accessor. Within the Alliance
policy, there was a section that particularly pertained to the employees in the factory;
confidential worker interviews and is specifically meant to engage the workers and is a
key tool to implement the process creating a human element of the fire protection
programs (Alliance Protocols, 2014). The Alliance also has included visual flow charts,
specific time lines in days, when items must be completed as well as check off lists. The
Alliance has a glossary of terminology attached in an appendix so there wont be any
misinterpretation of what is being referenced. The Accord does include brief sections
to the policy titled: scope, governance, remediation, credible inspections, and training.
One thing that did stand out about the Accord was the Trade Union Signatories on the
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last page of the policy. The Alliance was a much longer policy than the Accord, but it
was also more detailed and was very specific in the terms documented, therefore I
believe that that the use of this policy will be beneficial in achieving the stated goals.
After much review of the articles represented in The New York Times room for
debate, the most persuasive response to me was the article titled Address the Real
Challenges by Michael Posner. Based on the debate and Bremmers guarded
globalization, I would remain in the existing market in Bangladesh. According to
Bremmers guarded globalization, governments in developing countries are becoming
more skeptical about allowing new businesses to enter the country and protecting the
locals interests (Bremmer, 2014). With this in mind, it would prove credible to stay and
take the lead in helping Bangladesh to upgrade the factory. I believe as a vendor, they
have a moral responsibility to make the environment a safe one, especially considering
this country is high on the poverty line. Pulling out of the country will decrease the
revenue and the jobs for the people of Bangladesh; this will affect the economy in a
negative manner and have an impact on the locals as well as the country. When an
organization is considering entering into a foreign country, two questions must be
asked: is the industry strategically important to the government of the country we wish
to enter and is it the industry strategically important to the home government (Bremmer,
2014). A question that every manager should ask themselves is if the industry is
important to the locals and the people that will work in the factories.
It is very clear that entering into a business venture globally is not an easy task.
Many aspects of the business, building, people, culture, religion, and environment need
to be considered before the startup. Not only do home countries need to take into
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consideration the business aspect of a venture, but also the local people that this
business will affect. Safety is a key component of the country and its workers so being
an enforcer of all safety policies is an extremely important element of a business. It is
also imperative that the home country act morally and ethically when it comes to the
movement into a new country. When a business begins, it does not just affect the home
corporation, but a multitude of people. The home corporation should be held to high
standards and held accountable for their actions and take responsibility to all that are
affected.
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References

Alliance Protocols. (2014, April 11). Alliance for Bangladesh Worker Safety. Retrieved
from
http://www.bangladeshworkersafety.org/
Bangladesh Politics. (2013). Retrieved from
http://www.virtualbangladesh.com/bd_politics.html
Bremmer, I. (2014, J anuary). The New Rules of Globalization. Harvard Business
Review, 1-6. Retrieved from http://www.hbr.org
Daniels, J . D., Radebaugh, L. H., & Sullivan, D. P. (2013). International Business (14
ed.). New J ersey: Pearson.
Inkpen, A. (2013). Fire in a Bangladesh Garment Factory. School of Global
Management, 1-6. Retrieved from
Political Risks. (2012). Retrieved from www.aw-
bc.com/scp/0321280318/assets/downloads/ch17.pdf
World Compliance. (2013). Retrieved from
http://www.worldcompliance.com/en/resources/white-papers/foreign-corruption-
practices-act.aspx